STV, Inc. announced Wednesday that Joseph F. North has joined the company as avice president and project manager for operations, safety and security in thefirm's Transportation and Infrastructure Division. North reports to ChristopherJ. Holliday, P.E., senior vice president and national leader of STV's systemsand security practices; he is based in the company’s Newark, N.J., office.
Northwill head up several projects, including STV's work on a proposed rail route insouthern New Jersey being advanced by the Delaware River Port Authority and thestrategic guidance for the Triangle Transit Authority's compliance with FederalRailroad Administration regulations. North also will work to increase themarket presence of STV's security services.
A 34-year veteran of public transportation, with both public- and private-sectorexperience in the operations and maintenance of light rail, regional rail, busoperations, and paratransit systems, North most recently served as New JerseyTransit’s general manager of operations for Hudson-Bergen Light Rail Transit,Newark Light Rail, and the RiverLINE. North also has worked at the Bi-StateDevelopment Agency in St. Louis and Metropolitan Transportation Authority NewYork City Transit, and was a principal of a major management consulting firmfor seven years.
Transportation Secretary Ray LaHood had a “little bit of political advice” for the airline industry Tuesday.
“Don’t be against high speed rail,” LaHood said. “It’s coming to America. This is the President’s vision, this is the Vice President’s vision, this is America’s vision. We’re going to get into the high speed rail business.’’
“People want alternatives,’’ he said. “People are still going to fly, but we need alternatives. So get with the program.”
LaHood (pictured at left) made these comments in a Q&A session as he addressed the Federal Aviation Administration’s annual forecasting conference in Washington, D.C. The first questioner wanted to know why the administration was giving $8 billion to high speed rail.
Exactly one year ago, on March 9, 2009, the stock market hit its lowest point of the recession, and it was an abyss. Many blue chips had lost half or more of their value in the most severe bear market in 80 years.
On the anniversary of that day, stocks on the average have come back more than 65% in price. How have the railroads fared?
Far better than the average, for the most part.
A year ago today, Norfolk Southern shares bottomed at $26.69. They rose to $54.00 in mid-afternoon trading today, up 102.39% in a year.
CSX shares went from $20.00 a year ago to around $50.00 today, up 147.5%.
The price of a Union Pacific share bounded from $33.28 to $71.22,a 114% increase.
Kansas City Southern took the worst battering during the bear market, dropping to $12.15, and recovered most spectacularly, rising 195% to reach $36.16 on March 9, 2010.
In Canada, CN shares went from $29.57 to $56.29, up 90.3%; CP increased from $25.14 to $54.20, up 117.6%.
Two leading railroad industry analysts have weighed in with projections on railroad traffic and revenue growth.
Dahlman Rose & Co. recently held a seminar with freight economist and transportation industry veteran Noel Perry, who offered a wide array of observations, views, and predictions on the railroad and trucking industries.
“On the rail front Perry’s traffic forecast calls for 2010 carloading growth reaching the 6% to 7% range, with growth accelerating in 2011,” said Director-Equity Research and Railway Age Contributing Editor Jason Seidl. “While a vigorous return of traffic, along with solid pricing, should lead to strong revenue growth over the next few years, top line improvement will not necessarily be accompanied by equally robust operating profits, according to Perry.
Contrary to the view that the railroads and many in the investor community have expressed regarding high incremental margins emerging in the industry in tandem with the economic recovery, Perry suggests that the railroads’ ability to keep costs down will diminish significantly as the ongoing upturn in the market shifts into high gear. While he believes that the companies are likely to grow their top lines at impressive rates in the next couple of years, he cautions that a deterioration of service metrics is likely to accompany growth in carloadings. He notes that, indeed, velocity has declined in recent weeks as volumes have started to return (though weather may have had an impact as well). The deterioration of service levels, according to Perry, is a reflection of the traffic congestion, which should ultimately translate into higher operating expenses. Labor is one example of congestion-related costs that could increase significantly.”
Morgan Stanley analyst William Green, in a weekly report, said that rail volumes “could grow at double-digit rates in 2010,” with “recent weekly traffic data as thesis-confirming. As a result, we are adjusting estimates slightly higher for many of the railroads we cover, and in all cases, we continue to be significantly above consensus. In the coming months, we expect upside revisions to consensus driven by the following trends: (1) Weekly volumes tracking better than expectations, (2) Operating leverage to recovering volumes, and (3) Sustained momentum on core pricing. CSX and Union Pacific (a Morgan Stanley Best Idea) are positioned most favorably with respect to these themes.”
Greene also gave Canadian Pacific and Kansas City Southern high marks: “CP enjoys a number of favorable company characteristics that we look for in a recovery scenario, notably (1) exposure to higher-growth markets (i.e. outsized export bulk commodity exposure) and (2) easy operating margin comps to support earnings growth. . . . [D]espite balanced risks relative to other railroads, we see absolute upside through year-end.” As for KCS: “Not only does KCS benefit from all of the cyclical and secular trends driving Class I’s, but the company also benefits from a number of unique positives, including the recent re-pricing of a major contract driving industry-leading pricing growth in 2010, and unique volume growth opportunities (such as cross-border intermodal).”
Despite the impact of economic recession, Americans “took more than 10 billion trips on public transportation in 2009,” the American Public Transportatin Association reported—the fourth straight year ridership topped the 10 billion mark.
APTA noted the 2009 level “is a 3.8% decrease from the 52-year modern ridership record that was set in 2008. Bus and rail service cutbacks resulting from lower state and local funding also contributed to the ridership decline,” it said.
“Given last year’s economic hardship, this small decrease in ridership from a record number of ridership trips in 2008, indicates that support for public transit remains strong,” said APTA President William Millar.“ Considering that nearly 60% of riders take public transportation to commute to and from work, it is not surprising that ridership declined in light of the many Americans who lost their jobs last year.
“Public transportation is an important part of our transportation system and tens ofmillions of people rely on public transit every day,” Millar continued. “It is imperative that federal, state, and local governments continue to invest in public transit. Otherwise, many Americans will be facing increased fares and service cuts as public transportation systems struggle to balance their budgets with less revenue because of the economic recession.”
Among various modes, U.S. light rail (including streetcars and heritage trolleys) saw ridership slip 0.40% in 2009, but nine existing systems notched increases. Heavy rail (such as subways) saw ridership decline 2.6%, with four cities recording increases defying the downward trend. Overall regional (“commuter”) rail ridership fell 5% during 2009. Large bus systems reported a decrease of 5.2% nationally.
Vice President Joe Biden and U.S. Transportation Secretary Ray LaHood jointly announced the award of the $600 million remaining from the $7.5 billion federal stimulus funding made available to transit projects in the Recovery Act that President Obama signed in February 2009. The 191 new grants in 42 states and Puerto Rico went mainly to small city and rural bus projects, though $200 million was awarded to rail systems.
Massachusetts Bay Transportation Authority received the largest chunk of the new money, in three separate grants: $51.11 million for track repair and operating assistance, $13 million for station improvements, and $90,000 for security cameras.
New Jersey Transit received $52.42 million for a combination of track and signal work, and buses.
Bombardier Transportation said Monday it has won a new order to deliver its CITYFLO 350 wayside package to Line 1 of the Lima, Peru, Metro. The contract, worth $22 million, was awarded by Consorcio Tren Eléctrico Lima, comprising a consortium, led by the Brazilian civil works company Construtora Noberto Odebrecht and the Peruvian civil works company Graña yMonteiro.
Equipment and services will be provided and delivered by Bombardier teams in Spain and Brazil.
Bombardier said the contract adds to the growing portfolio of CITYFLO 350 customer in Asia, the Middle East, Europe, and South America, including the Salvador Metro in Brazil. The company says the CITYFLO 350 automatic train control system is designed primarily for metro applications where only limited action is required from the train driver, such as opening and closing doors.
Bombardier will design, supply, install, and commission wayside and onboard CITYFLO 350 equipment for the 21.4-kilometer Lima and 15 trains to run on the line. The scope will primarily consist of: EBI Cab800 onboard automatic train protection system, EBI Lock 950 computer-based interlocking systems, EBI Track 200 track circuit, and EBI Switch700 point machine field elements. Bombardier will also provide the traffic management system based on the EBI Screen 2000 control center system.
Anders Lindberg, president, Rail Control Solutions, Bombardier Transportation, said: “Two main reasons make us very pleased with this new order. It is an important project for the city of Lima and it also shows that we are expanding in a region which is quickly developing.”
Carlos Levy, Bombardier transportation chief country representative for Brazil, said: “This order further introduces our technology to the regionand this is a strategic objective for us. We look forward to closely working with Odebrecht and the Tren Eléctrico Lima consortium to achieve this project.”
The news for Bombardier in North America Monday was less upbeat. The company plans to lay off 140 workers at its Bath, N.Y., railcar refurbishment facility beginning in June. Bombardier cited completion of rail contracts with Metro-North Railroad and Maryland’s MARC as reasons for the move.
Bombardier currently employs 220 people at the site. “The precise number of layoffs will depend on whether the company is able to land other railcar refurbishment work,” said spokeswoman Maryanne Kowalski-Roberts. "We're always pursuing other contracts.”
Kansas City Southern announced Monday that it has acquired the Puerta Mexico intermodal facility at Toluca in the State of Mexico on KCS’ International Intermodal Corridor.
“Puerta Mexico is well-positioned, making it a valuable enhancement for our cross-border service offering,” said David L. Starling, KCS president and chief operating officer.
He said that Kansas City Southern de Mexico this month will add direct train service from Lazaro Cardenas to Puerta Mexico, providing Mexico City import and export shippers with a consistent, reliable, and faster service alternative.
“The growth of manufacturing activity and international trade flows in the Mexico City area is increasing the demand for modern, multi-modal terminals in Mexico’s industrial heartland." said KCS Executive Vice President Sales and Marketing Patrick J. Ottensmeyer. "The strategic location and modern facilities at Puerta Mexico will allow KCS to better serve these growing markets.”
He noted that with its connection to the KCS rail network, Puerta Mexico serves the industrial centers of Mexico and the U.S., several important seaports, and the Toluca-Mexico City industrial corridor. The facility provides intermodal rail and truck services and warehouse storage and customs-clearing.
“Since 1996, KCS has invested over $3 billion to expand and improve Mexico’s rail infrastructure. The purchase of Puerta Mexico further demonstrates KCS’ commitment to Mexico and its institutions, the appeal of Mexican markets, and the viability of direct foreign investment in Mexico,” said KCSM President and Executive Representative Jose G.Zozaya. “Puerta Mexico is a key link in KCS’ International Intermodal Corridor, creating a continuous cycle of economic growth for Central Mexico.”
Facing the requirement to cover a $300 million budget deficit for fiscal year 2011, New Jersey Transit Friday released its plan to increase rail, light rail, and bus fares 25% and to “trim service proportionate to recent ridership declines.” Left unstated was the impact of several recent service cutbacks, applied unilaterally by NJT, that some observers may have contributed to such rider declines in tandem with recession.
“We recognize that any increase is a burden for our customers, particularly during a recession,” said Executive Director Jim Weinstein. “However, we have worked to keep local bus fares below the regional average and preserved some important discounts for seniors and people with disabilities, as well as for students and others who are among the most transit dependent.”
Following public hearings on the plan—hearings that were not held during recent, more modest service “adjustments” during the administration of Gov. Jon Corzine—NJ Transit would enact its fare and service changes May 1. NJT says it expects to generate more than $140 million in revenue. It noted that with the proposed increase, fares will be 3% lower than they were in Fiscal Year 1991, based on inflation-adjusted dollars.
Service reductions seek a goal of “reducing service proportionateto ridership, which has declined systemwide by about 4% as a result of the economy and low fuel prices,” NJT said. “In all, the agency proposes to eliminate 32 of 725 commuter trains, with at least two trains scheduled for elimination on each of the system’s 11 lines.
“Our service plan is designed to size our service to match ridership demand,” said Weinstein. “We also looked at where we could squeeze out the most costs while impacting as few customers as possible.”